Did you know that the home-ownership rates have increased in the past decade? The mortgage rate soared high before 2018; however, now the rate has started to thaw. Needless to say, this has paved a solid way to help the would-be-buyers to purchase affordable houses. But this does not mean that the rate can never go up again. If you are lucky enough, you can find lenders offering interest rate at 4.75%. The first-time buyers like you must remember that the interest rate, tenure, and type of loan can drastically influence the money you spend. So, isn’t it better to find a loan with the lowest mortgage rate?
We don’t even need to emphasize how a home purchase is an indicator of your success. Of course, the process can be a little costlier than you imagined. On top of it, a high mortgage rate is a nightmare. Keeping this concern in mind, here’s a guide on how to find the lowest mortgage rates in Houston.
Start Saving up for Down Payment
When you have sufficient liquid cash, you can put 20% down payment. If you wish to lower the mortgage rate, you need to go for a large down payment. The loan officers accept lower down payments; however, the private lenders in Houston provide less than 20% down payment. At this time, you need to pay private mortgage insurance or PMI ranging from 0.5% to 1% of the actual mortgage rate yearly.
Remove the Collection Accounts
Apart from checking the loan program and lender’s credibility, you should focus on your credit score as well. One of the reasons why you are behind can be due to the collection accounts. You can seek help from the Credit Bureau and dispute the account. After running verification for almost 30 days, the authority will omit the account from the credit report. This will help you improve credit and avail low mortgage rate in Houston.
Check Annual Percentage and Interest Rates
Instead of haphazardly jumping into a loan program, you need to take a hard look and compare the interest rate and fees. The total amount indicates the annualized number. Annual percentage rate helps the borrowers to select the right loan after checking the real cost of the mortgage.
Revaluate the Mortgage Options
Before selecting one mortgage product, you should check the available loan types. If you are eligible for the VA loan, a conventional loan is not right for you. Or, when your credit score is lower than 600, you can opt for FHA loan. VA and FHA loans are perfect for borrowers with a low credit score. Additionally, these non-traditional loans offer lenient eligibility requirements along with down payment option.
Opt for Local Lenders in Houston
When you are shopping for a house loan, you cannot discard the local banks. There are different reasons and the local Houstonian lenders provide low fees and better terms compared to national banks. On top of it, the local loan officers are flexible when it comes to underwriting for borrowers with poor credit history.
It is completely normal to feel confused at this stage. That’s why resort to professional lenders who can make such difficult tasks a cakewalk.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.